Some Nigeria stocks look attractive for a swap with Pakistan and other frontier equities.

So says Nikhil Bhatnagar, an Asian equity analyst at Auerbach Grayson. At the heart of the argument: the decline in oil prices is hurting Nigeria’s currency and market overall. The biggest losers are in the consumer and cement industries, Bhatnagar writes. His logic: Nigeria and Pakistan have similar geopolitical risk, but Nigeria consumer stocks are trading at a discount to the group multiple of about 28 times.

He suggests it makes sense to swap from Pakistan to Nigeria consumer names.” Here are two he suggests:

“Unilever Nigeria (market cap – $663 million): after its steep decline looks the most interesting now. It is now the cheapest Unilever subsidiary. In the world and valuations are at par with the parent (20x 2015E), which makes it a good time to start taking a fresh look. Also post-election next year, I would think staples should be a good early cycle bet in 2016.

Nigerian Breweries (Heineken subsidiary, market cap – $7.3 billion): might be another interesting name to look at, the valuation premium to parent has shrunk to 15-20% and the dividend rockets to 3.5-4% at this price.”

Related: since the beginning of the year, the Indian rupee has appreciated nearly 9% against the Nigerian naira, which makes Nigeria’s oil more attractive for India. Bhatnagar thinks that Nigeria could double its oil output, from a 12.5% share of India’s oil supply, and displace Saudi Arabia, which produces 25% of India’s oil supply. He writes:

“With an annual energy import bill between $125-150 billion, even a 5% shift in India’s energy basket towards Nigeria would make the current capital outflows look like a joke.”

U.S. investors can get access to Africa stocks through an exchange-traded fund, though some ETFs are small and illiquid. The top holding in the Global X Nigeria Index ETF (NGE) is Nigerian Breweries; it’s up 0.5% today but has tumbled 23% year to date. The Market Vectors Africa Index ETF (AFK) also includes Nigerian Breweries among its top 10 holdings. That fund is down 0.3% today, and has fallen 4.4% this year. A broader play: the EGShares Emerging Markets Consumer ETF (ECON).

For a list of India ETFs, see “India Stocks: Is Modi RallyLosing Steam?” The answer to that question, since September, has been no. The best ETF performer, up 80% over 12 months, is the iShares MSCI India Small Cap ETF (SMIN). The fund is up another 1.3% today. Compare that to the iShares MSCI Emerging Markets ETF (EEM): it’s flat today, and up 1.3% over the past year.

A funeral following an Oct. 5 suicide bomb attack that targeted the minority Shiite Hazara in Quetta, Pakistan.

With the credit cycle maturing, bank valuations in India and Indonesia look similar as investors compare elections in each country.

But while declining commodity prices for Indonesia won’t be a disaster and leverage remains low, net interest margin de-rating in 2015 will put pressure on returns. Thus, drawing parallels with India’s post-election euphoria may be overdone, according to recent research by Auerbach Grayson’sNikhil Bhatnagar:

“Bank valuations in India and Indonesia look similar while we stand at opposing ends of the credit cycle. Which suggests it makes sense to switch between the banks in the two countries, the 35% outperformance for the S&P Bombay Stock Exchange Bankex Index against my synthetic Indonesian banks basket from the lows of last year doesn’t seem much and should accelerate as we see further signs of asset deterioration and net interest margin deceleration in Indonesian banks even as growth picks up in India.”

As for Pakistan, any roadshow involving Pakistan “is one of confirming and denying prejudices more than the seeming paradoxes of stock market performance over the last 5 years,” Auerbach says. Despite that, Pakistan could move from frontier to emerging market within a mere “couple of years.” Auerbach recently traveled with the chief executive officer of its new Pakistan partner, Topline Securities, and offered these observations:

” … Client queries generally oscillated around the evolving political situation and clearly valuations and yield have not meaningfully tipped the scales for an outright portfolio bet on the country for most investors … Over the next 6 months $2-2.5 billion of new float will come on stream from Pakistan through divestments which should take its MSCI frontier market weightage higher to 9-9.5% with its subsequent effects on passive flows. Subject to qualitative criteria being met, Pakistan could re-enter the emerging market indices in a couple of years. Energy continues to remain the fundamental crippling effect on the economy and we are unlikely to see a solution at least over the next 4-5 years.”

India’s ICICI Bank (IBN) is up 1.9% today, while India pharmaceutical company Dr. Reddy’s Laboratories (RDY) is down 1%. The iPath MSCI India Index ETN (INP) is up 1.6%, while the EGShares India Infrastructure ETF (INXX) is up 1.3%.

About Emerging Markets Daily

Emerging markets have been synonymous with growth, but the outlook for individual nations is constantly changing. Countries from Brazil and Russia to Turkey face challenges including infrastructure bottlenecks, credit issues and political shifts. Barrons.com’s Emerging Markets Daily blog analyzes news, data and research out of emerging markets beyond Asia to help readers navigate the investment landscape.

Barron’s veteran Dimitra DeFotis has been blogging about emerging market investing since traveling to India and Turkey. Based in New York, she previously wrote for Barron’s about U.S. equity investing, including cover stories and roundtables on energy themes. Dimitra was among the first digital journalists at the Chicago Tribune and started her career as a police reporter at the Daily Herald in the Chicago suburbs. Dimitra holds degrees from the University of Illinois and Columbia University, where she was a Knight-Bagehot Fellow in the business and journalism schools. She studies multiple languages and photography.